What does the increase in interest rates mean for you?

Last week’s 0.2% interest rate hike caught financial experts on the hop. While most economists had predicted a rate rise some time in 2007, nobody anticipated it would come so quickly. This could mean many borrowers – particularly first-time buyers – will struggle with mortgage repayments.

So this week Mortgage Strategy asks: What does the increase in interest rates mean for you?

I wasn’t aware that interest rates had gone up. I don’t have a mortgage so I don’t think it has any bearing on me. I don’t put money in the bank to save either, so the rise won’t affect me either way.

Jonny Helm, 18, student

I’m a student at the moment so I don’t feel the rise in interest rates is an immediate concern for me. But I am trying to save money so I guess this will mean I get a better return on my savings. My account is with NatWest and I shopped around a bit so I think it is pretty competitive.

Stuart Osborne, 30, technical director

I was shocked that the base rate rise came so early in the year. I am on a fixed rate mortgage so this change won’t have any effect on my repayments. I reckon I’ve been fortunate and am glad I took out a fixed rate.

Richard Condon, 36, hairdresser

I am renting. I would love to get onto the housing ladder but it’s too expensive. This interest rate rise pushes the ladder further away from me, but I have a child which is a more important concern for me right now. I guess this rise might keep the economy buoyant and it could be a good thing for industries like mine if it keeps inflation down.

Tom Geldard, 25, account manager

I don’t have any savings and I don’t have a mortgage. To be honest I find all this stuff a bit dull as my partner looks after all our financial matters.

Derek Hull, 72, retired

This interest rate rise is stupid. It’s going to mean people going broke. I have two daughters, one of whom is trying to buy a house. I don’t think this will help her.

Dominic Lester, 23, runner

I am aware that interest rates have gone up but it doesn’t have any bearing on me. Putting the rate up just means that buying a house is even further out of reach for the likes of me, as it makes it more expensive.

Giles Cuthbert, 32, management consultant

I am on a fixed rate mortgage so this hike doesn’t affect me. It is a two-year fix so I am OK until November. Then I’ll have to decide what to do. Although I thought rates would go up, I thought it would be by less. This seems a bit drastic.

Benny Trickett, 40, video editor

I have just returned from New Zealand and am looking to buy in London so the rise is bad news for me. I’m looking to buy a four-bedroom house. But to be honest, I’m banking on a crash in the housing market which I think will have to happen. I don’t think interest rates will keep rising and I think house prices will eventually come down.

Stuart Gallie, 42, lawyer

Fortunately I’m on a fixed rate so my principal concern is November when I will look to remortgage. I have been helped a lot by my bank and particularly my personal bank manager in arranging my mortgage, although it is the size of Peruvian national debt. I am paying a rate of 4.55%. Like everybody else I was a bit surprised by the interest rate rise but I think it’s a response to worries about rising inflation.

Jerry McNulty, 45, IT consultant

I took out a mortgage last Friday but this was in no way prompted by the base rate change the day before. It is a two-year fix with Northern Rock. The rate is 4.9% which I think is pretty competitive. It would be nice to have had some savings so I could have earned a bit more interest, but all my savings went into the mortgage.

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